Holiday briefing for Thursday, January 6, 2011

6th Jan 11, 8:01am by David Chaston

It may be the holiday break, but in the rest of the world, business goes on. Here is a quick snapshot of some key news and data overnight.

Fonterra has announced that its latest online auction of milk powders has seen a +7% rise in price since the last auction two weeks ago. The rising fx rate has eaten into some of that.

"Most Americans" say, tax the rich.

HSBC has raised its market-leading short-term fixed mortgage rates. It has retained a noticeable advantage however.

PGGWrightson Finance has changed many of its term deposit rates, pushing some longer-term ones as high as 8.50%. Even with the Government-guarantee, you can now get 8% for a big TD.

The US deposit guarantee agency, the FDIC, is suing bank executives of institutions who failed, for billions.

World food prices are spiking higher, and the UN is worried.

more below ...

		8 am		--- 52 week --
		Today	yesterday	high	low
		--------	--------	---------	---------
FX rates	NZ$1=US$	0.7614	0.7665	0.7964	0.6584
	NZ$1=AU$	0.7613	0.7627	0.8212	0.7408

Gold	in US$	1,368	1,386	1,421	1,058
	in NZ$	1,797	1,812	1,877	1,507

Copper	in US$	9,754	9,740	9,740	6,091
	in NZ$	12,811	12,707	12,811	8,951

Crude oil	in US$/bl	90.52	88.84	91.45	70.15
	in NZ$	118.89	115.90	121.36	101.30

US Treasuries	30 yr bond	4.44%	4.39%	4.78%	3.61%

Dow	DJIA 30	11,729	11,659	11,729	9,614

China may be about to help 'rescue' Spain by buying its government bonds.

The DomPost is reporting that the IRD is about to take more of the funds the receivers have recovered in Bridgecorp, leaving investors with an even smaller potential recovery. It is the second time the IRD has done this.

No chart with that title exists.

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

43 Comments

by Wolly | 6th Jan 11, 9:25am 1294259123

"Even with the Government-guarantee, you can now get 8% for a big TD."...are you sure about that David?...the GG runs out dec 31..so the only term inside that is the 9 month and a quick look has the best rate at 7% with fpf....or am I wrong?

by andyh | 6th Jan 11, 10:01am 1294261304

Just so Wolly. In fact this table

http://www.interest.co.nz/saving/term-deposits-1-to-5-years

is misleading because when you look at the returns for companies such as Wrightsons its implying that the 12 month and above terms are all covered by the govt guarantee. Given that guarantee is scheduled to run out in Dec 2011 only part of those investment terms are in fact now covered by the guarantee.

This should be made clear as I can tell you from personal experience it is tripping up less informed individuals.

by Wolly | 6th Jan 11, 10:10am 1294261833

A moot point that....anyone making said term deposit may now be stuck with it, thinking they are covered, when they are not.

I stick with oncall or term inside the GG cover...fpf are great....

Best to be ready to grab funds fast and move them offshore if you have a safe route and safe destination....what will the budget do to the Kiwi$...!

by speckles | 6th Jan 11, 11:02am 1294264960

who is fpf

by Wolly | 6th Jan 11, 11:15am 1294265706

fisher paykel finance

by Kunst | 6th Jan 11, 11:27am 1294266444

It fit’s into the category food production/ supply or HAARP - I guess.

Can someone tell me, why currently worldwide (especially USA) birds and fish are dying in the thousand’s ?

by Wolly | 6th Jan 11, 11:29am 1294266588

Actually Walter they are dying in the millions all the time....a while back it 'rained' frozen geese across a town in the US...it's to do with the violent updraughts in the big storm cells...I think a hang glider pilot got the same treatment one day...

The fish get stomped on by changes in water temp and ozygen levels as well as dumped due to the stupid bloody fishing regs...what do you do with bycatch...back it goes or lose your boat...so heaps get dumped over the side...stupid rules.

by Kunst | 6th Jan 11, 11:42am 1294267347

Wolly, that’s not what I mean have a read here:

http://news.google.co.nz/nwshp?hl=en&tab=wn&q=birds%20dying

by Wolly | 6th Jan 11, 11:46am 1294267586

Same answer Walter....been going on since fish was fish and birds was birds....what you are responding to is a media event....an Orson Wells tale !

by Kunst | 6th Jan 11, 11:54am 1294268098

Wolly - to me it sounds rather odd. On that particular occasion I say like the PM - hmm - we wait and see or see and wait.

by Wolly | 6th Jan 11, 11:43am 1294267407

Glimmers of hope!

"They have brought misery to thousands of others, but the aftermath of the leaky home crisis and the Canterbury earthquake are being held up as glimmers of hope for the building industry.

Master Builders says a slowing of the market at the end of last year means the industry is at a low ebb.

Chief executive Warwick Quinn said the non-residential market has also fallen quite significantly, after being propped up with government spending on schools and infrastructure.

He said the only two areas where there is any relief in sight are the leaky homes package and the Canterbury earthquake recovery."tvnz

So what's the going hourly rate for a builder these days...or any one of several tradespersons?

by Wolly | 6th Jan 11, 2:49pm 1294278542

You're going to ask lawyers what the impact of the Courts decision will be......seriously!....you might discover what their opinions are if you ask the top end car retailers how many new orders they have received from the legal mob....I'm picking about ten years of fees Hugh....which ever way the homeowner plods..they plod through a lawyers office.....kachiiiiiiing

by Wolly | 6th Jan 11, 5:18pm 1294287487

I will resist the temptation Hugh.

I see many many Court cases coming down the pipeline....mostly Councils Vs the others!( probably on breach of Torts).....I also see the govt doing handstands on the Beehive roof trying to slip out of the 25/25/50 offer!

by Wolly | 6th Jan 11, 6:53pm 1294293204

He's just another Stonecutter's puppet hugh. Everyone in Cabinet has strings attached. The aussie banks rule the roost over here and will do so far into the future. They take their orders from the Fed and the BIS. Check out Money Morning today and discover the manipulation going on in the RBA and the aussie banks and at the ASX... When Bernanke whispers jump....our govt does what it is told.

by iconoclast | 6th Jan 11, 6:27pm 1294291677

The councils have loads of loot .. on 3 Jan I posted

In 2000 local body equity in assets owned was NZD $42 billion. Ten years later, in 2010 local body equities were $92 billion. Not bad. Deflation proof. Central Government should organise an IPO and float it on the NZX. Should be a winner. Recession proof.

http://www.localcouncils.govt.nz/lgip.nsf/wpg_url/Profiles-Local-Government-Statistical-Overview-Index

Explain how these councils have increased their assets by this much out of revenue while at the same providing normal services. Or is it purely smoke-and-mirrors re-valuations of their council buildings?

by Wolly | 6th Jan 11, 6:46pm 1294292778

Bang on icono...smoke mirrors and total BS. How can Councils meddle with the property values if the ratepayers council property has not changed in value.....one stonking big rort.

by Wolly | 6th Jan 11, 12:40pm 1294270840

How really awful...why weren't we warned!

"A leading bank economist is warning home buyers that current below-average fixed term mortgage rates could start rising "quite rapidly".

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10697993

Bloody misleading waffle......according to this person the reason for a rise would be the NZ economy doing much better sooner than the RB expects...not a word about the macro fiascos....no hint that a rising cost of credit for the bank overseas would flow directly to rates in NZ..no mention of inflation caused by Bernanke and imported here......no it's all BS about this bank expecting "recovery" in our time.........waffle.

That does not mean punters should not keep an eye out for the wall of more expensive credit on its way. Floating will explode higher. Fixed rates also.....go check out the past history of rates movements when chaos is in control.

by FCM | 6th Jan 11, 1:14pm 1294272888

Builders etc are working on $45 an hour rate for rebuilding in Canterbury....not bad considering about five-six years worth of work. Meet a guy the other day his whole team (5 in all) transfered down from Hamilton, assesing for EQC at the moment and once that is finished will turn around and start the rebuild.

by Gummy Bear Hero | 6th Jan 11, 2:34pm 1294277677

Totally off-beam here , but isn't it wonderful in summer to see the Aussies doing so well in the cricket against England ............ 4 of them have brought up the " ton ".......... pity that it is the Aussie bowlers , they're in the field . .......... Shame ( yeah , right ! )

Aha ha ha de bloody ha... , yer cheating lying yellow-bellied under-arm toss-pots ............ Hmmmmmmmmm.... , and that's just the introduction to Billy Bowden's video , " So You Want to be an International Umpire . "

by Wolly | 6th Jan 11, 2:51pm 1294278673

Not going to aus for the hols this year Gummy!.......mind you don't share your bed with an Eastern Taipan.

by Gummy Bear Hero | 6th Jan 11, 3:22pm 1294280573

You're right , Wolly . I need a holiday , too much stress here on the beach . We're off to Hong Kong , taking the 5 y.o. to Disneyland .............. Havn't you guys got a Disneyland in NZ , in Wellington ain't it ?

by Wolly | 6th Jan 11, 4:10pm 1294283440

It is indeed and I know me ways round it as well...!

by Wolly | 6th Jan 11, 3:58pm 1294282704

"Can you believe it? Not a single word has been spoken or written by anyone at the Reserve Bank of Australia concerning the secret multi-billion dollar loans from a foreign central bank to two of Australia's "strong" and "stable" banks." money morning.

What are the implications of this borrowing on the banks in NZ.....on us fools who believe in open markets and honesty under the new rules.............what a friggin joke.

by Wolly | 6th Jan 11, 4:21pm 1294284097

"Up to 50 redundant Pike River Coal mine employees could soon be crossing the Tasman to take up lucrative positions in Australian pits.

Numerous Australian mining companies have been to the West Coast recently trying to tempt the miners into full migration, while others are offering to fly workers back to Christchurch for a nine-day break at the end of a broken 15-day shift." harald

Now that's a great xmas present isn't it....who wouldn't go? The fly fly option is the one to take.

by Wolly | 6th Jan 11, 4:26pm 1294284377

Here's one New Zealander we don't want back.....

"Interpol is hunting a former Auckland man and his British wife suspected of masterminding a European property scam alleged to involve almost $2 million." harald

by Malarkey | 6th Jan 11, 4:54pm 1294286053

No wonder Olly hasn't been around here lately.

by LOL | 6th Jan 11, 9:18pm 1294301939

LOL is not only LOL but also ROTFLMAO!

by eliteincome | 6th Jan 11, 8:10pm 1294297855

Hello NZ

Just back from hoilday in Australia as have 3 young boys that will be looking for a future.

NZ is a nice place to live an grow up with your family.

NZ has a huge problem in keeping people here that want to make money.

You would have to be crazy or insane not to get your family into high earning careers in Australia.

If you are get up an can do person why would you live here.

All I see is more state houses being built for people who never paid tax an never will.

We seem to be letting people into the country that will never work,there hangers on are all sick.

True go visit the hospitals an stand in line,if your a tax payer go to back of the line.

The bottom feeders do not create wealth for this country.

Start backing people who get out off bed in the mornings,attract can do people.

NZ is crapping on good people who are the backbone to this country.

No jobs well get people into growing food for export,they tell me there is food shortage.

We have a work force that is paid to sit around,get them busy an teach them new skills.

Full employment for everybody,no dole in NZ as eveyone has a job.

Busy productive people are HAPPY

by Gummy Bear Hero | 6th Jan 11, 8:36pm 1294299392

Well said , and you covered alot of the ills bestowed upon NZ by successive governments . But I've got one more for you , the ubiquitous " government guarantee " , which encourages foolish behaviour by investors , 'cos their losses are paid back in full , plus interest............ But at the expense of all the tax-payers .

And if you want an expert's view on this , try page 59 of Mohamed El-Erian's book " When Markets Collide " : ---------

Quote : " ...... fearing a more general run on the UK banking system ( after the Northern Rock collapse ) , Alistair Darling [ Chancellor of the Exchequer ] informed the public that the government would guarantee all deposits . As one observer at a conference noted , this ' opened the door of banks and others to gamble with guaranteed deposits ' " .

The government in NZ is still running it's guarantee on retail deposits ?

And the cost to tax-payers in bailing out the failures is currently what ........... $ 2 billion , and climbing !

by powerdownkiwi | 6th Jan 11, 8:49pm 1294300162

you only have to be ignorant, and perhaps own a boat.

Aussie is right in the firing line for resource depletion (then what have they got) and climate change (ditto).

But as soon as those flooded coal mines are dried out, we'll be back in action - we need the income, right?

And here, it's back to the 'important' message from old Johnny one-note.

Which brings me back to the first half of my first sentence.

by Elley | 6th Jan 11, 9:51pm 1294303879

Eliteincome (I like the name)

1. Come on, not everybody's goal in life is to accumulate as much wealth as possible... Doesn't necessarily mean they're either crazy or insane.

2. I wouldn't use Australia as an example of high-earning careers. Sure, you may get a (much) better income than in NZ but once you take the sheer cost of accomodation into account, it doesn't look that great to me (and I'm not even going into the numerous animals that could make my life significantly shorter!). I'd suggest Europe, eg UK, Germany, France instead.

3. "Why would you live here"...because you like it maybe? Because you have lived and worked in other countries and realised that each of them has their own problems and no place is ever gonna be perfect?

4. "We seem to be letting people into the country that will never work" - Tell that to the French. They've got huge problems currently with (sometimes illegal) immigrants, from Romania among other countries, and have been flying them back and giving them money to stay away...but 2 months later they're back. And in France, you are entitled to all sorts of subsidies from the first day you are in the country, you don't have to support yourself for 2 years first like here. Oh and btw, my husband and I are highly skilled immigrants on high incomes.

5. As for getting paid to "sit around", you can't have experienced many places if you think NZ's social welfare is excessively generous, see above. Not saying I think it's a good thing to give hand-outs for all sorts of reasons, on the contrary, but there are countries much much worse in that respect (that don't do too bad economically or otherwise).

That said, we were talking today about the possibility of going back to France for a year or so. Not for the money though, and certainly not because I think my 4 young kids won't find "a future" if we stay in NZ, but for temporary proximity to the grandparents (and babysitters for us!).

by David B | 7th Jan 11, 1:26pm 1294359974

@ eliteincome

Hi, eliteincome, since you see your young sons’ futures as being in Australia and not here, could you please do me a small favour and move there asap. As A New Zealand tax payer I don’t want to have to foot the very expensive bill of paying for your children’s education and healthcare costs as well as any other assistance you might get from the NZ Government e.g., Working for Families. From what you are saying it appears you are more than happy to take from New Zealand to raise your family, but you appear to have no intention to give anything back once that has been done. So on that basis, if you don't move more or less straight away, you run the risk of being the very thing you are running others down for being. A bludger.

by iconoclast | 7th Jan 11, 1:34pm 1294360490

@ David

There is a lot of things right with NZ and there are a lot of things that have gone wrong in NZ at the hands of the leaders .. so just for a fair-and-balanced point of view what is your position with regard to the wellingtonian who was in the news the other day who has never worked a day in his life, who together with his wife, have been on welfare for 26 years and drive around in a 2007 model car?

by David B | 7th Jan 11, 3:52pm 1294368722

@ iconoclast

I’m not familiar with reports of any Wellingtonian who has been on welfare for the last 26 years. Perhaps you are referring to the Cantabrian former gang leader who has been on a sickness benefit for that time? Given that as a former gang leader he is likely to have been heavily involved with criminal activity I’m not surprised he’s been on a benefit for that long and drives a 2007 model vehicle. I imagine my views on that would be the same as the majority of New Zealanders views on it are. Is his receipt of the benefit for that length of time that the fault of the politicians, of course it’s not. What a silly suggestion. It’s entirely due to the intentional (and quite possibly criminal actions) of that gang leader.

By the way, I don't accept that NZ has gone wrong at the hands of its leaders. New Zealanders elected those leaders they weren't royal appointments. Therefore anything that has gone wrong with New Zealand is the fault of New Zealanders.

by Sheep Shagger | 6th Jan 11, 8:55pm 1294300516

OK, Eliteincome, another one set on bagging NZ. Give us some suggestions of how you would go about all of this. Like Kunst you have dished up some slogans but no genuine solutions apart from grow food which as it may have escaped your notice is exactly what we do!

How do taxpayers get shunted to the back of the line at hospitals???

As for your generalisation about immigrants, NZ is lucky to benifit from many wonderful immigrants who are productive and contribute well to our society and best of all fully apprechiate the good things about NZ not just see the bad.

There may be more coin in Aussie especially if your prepared to work in the mines in 45 degree heat in some outback hovel. They'll need it to buy a house anywhere half decent.

By all means take your kids to Aussie along with their NZ taxpayer funded education this country obviously does not meet your needs.

Whatever happened to "ask not what your country can do for you, but what can you do for your country"!

by Grant A | 6th Jan 11, 9:41pm 1294303307

Sheep Shagger - as you obviously realise, Eliteincome is one of those typical NZ talk back callers that frustrate the rest of us...nonsensical complainers that have absolutely no idea how to suggest a solution, and then when they attempt to do so, they prove to the rest of us that they have zero economic intelligence.

Yes NZ does not have the perfect economy, but the vast majority of the other 194 countries are infinietly worse. Eliteincome please suggest improvements, but stop being a complainer unless you have a logical answer to the problem(s)

Wikipedia: P is the sixteenth letter of the basic modern Latin alphabet. »

by Sheep Shagger | 6th Jan 11, 10:21pm 1294305685

Cheers Grant. I actually believe that one of NZs main problems is our lack of nationalism in anything except the All Blacks. Im not talking about American ra ra or angry nationalism just abit of good old pride in our country and a willingness to see the good as well as the not so good. I quietly support Foodstuffs over Progressive or Smith City over Harvey Norman etc not because of govt decree but as a way of supporting my fellow NZ citizens.

It annoys me how we constantly demure to Australia as some sort of Nivarna against our hopeless third world wasteland. Independant analysis often rate NZ cities as amoungst the most livable in the world and ahead of their Australian counterparts. As Elley points out above income is but one measure of success, it has to be balanced against expenses and general quality of life. This country has been good to me and my family over a number of generations and I really hope for my daughters too come.I hope I contribute back abit along the way,which is how it should work.

Elley. I often read your posts amoungst some fervent criticism of this or that subject of the day and wonder how you feel about moving to a country which the locals seem to have so low of an opinion. I like how you see the good as well as the can be improved and I hope you dont let them get you down too much we are not all like that as im sure you realise. I hope you see fit to return oneday if you do head "home".

by Elley | 7th Jan 11, 6:26pm 1294377985

SS, I must admit that seeing NZers putting themselves down so much annoys me quite a bit (especially the "Ozbsession")! I agree on the lack of nationalism. After over 8 years here, I certainly don't see NZ through rose-tinted glasses but it'd hard not to realise how lucky I am to be able to live here. Plenty of space, beautiful views to the mountains, 10mn to the river and 30mn to the sea, a majority of lovely people, no job worries, I mean, who'd complain? It's funny how people in each country have a different mentality. Apparently the French are seen as arrogant, and it's probably true. But at least, they don't constantly self-criticize (they just strike lol). I guess I'd like Kiwis to believe more in themselves but as you say, not everybody thinks like Eliteincome anyway.

As for going "home", we can't see ourselves going back for good. Home is here now and our kids were born here. The reason we were discussing a temporary transfer yesterday is because the 100% NZ company we've been doing quite a bit of development for is quite keen on breaking into the French market. It could be a good opportunity for both parties if we helped open a new export market for them by setting up a subsidiary in France and a distribution and sales network. We could do that in a year or so. It'd definitely be good for this NZ company, and good for our kids to develop a solid relationship with their grandparents while they're young. But we'd be back :)

by Wolly | 7th Jan 11, 6:36pm 1294378616

Jeez Elley, if you go...can you bring me back one of them giant timber framed oak barns in pieces?....just one will do!

by Sheep Shagger | 7th Jan 11, 7:47pm 1294382878

Elley, all the best with that, it sounds like a win win senario. Its funny how life seems to work out sometimes.Do a good job for us over there, but we'll look forward to getting you back.

by Casual Observer | 7th Jan 11, 9:40pm 1294389647

It would be great for your and your family Elley (so long as you came back! :-) ) Exciting times and big decisions. As I have UK domiciled young grandchildren, I can understand how excited your family in France will be, to have you go and stay a while.

Good luck with your decision making!

I agree with you and SS - we are not a very nationalistic country - unless we are playing sport. Perhaps it is understandable when 'New Zealander' is not a recognised ethnicity. :-)

by speckles | 6th Jan 11, 10:25pm 1294305900

eliteincome the flamer? :-)

I certainly hope so otherwise you are missing some aspects to a balanced life.

Everywhere has it limitation and advantages it just a mix and match really.

I learnt early on smart operators can make a good living here yet you have to go overseas to make a killing. Everything has its place, if money is your game i would look at Europe or Asia if you can fit in.

A lot harder to make a fortune everywhere at present so the grass an't always greener.

by Vanderlei Luxemburgo | 7th Jan 11, 11:02am 1294351335

Lol i think your spell check is broken.